A Novel Profit Maximizing Metric for Measuring Classification Performance of Customer Churn Prediction Models
The interest for data mining techniques has increased tremendously during the past decades, and numerous classification techniques have been applied in a wide range of business applications. Hence, the need for adequate performance measures has become more important than ever. In this paper, a cost-benefit analysis framework is formalized in order to define performance measures which are aligned with the main objectives of the end users, i.e., profit maximization. A new performance measure is defined, the expected maximum profit criterion. This general framework is then applied to the customer churn problem with its particular cost-benefit structure.